Correlation Between Orbit Technologies and Dan Hotels

Can any of the company-specific risk be diversified away by investing in both Orbit Technologies and Dan Hotels at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Orbit Technologies and Dan Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orbit Technologies and Dan Hotels, you can compare the effects of market volatilities on Orbit Technologies and Dan Hotels and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Orbit Technologies with a short position of Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbit Technologies and Dan Hotels.

Diversification Opportunities for Orbit Technologies and Dan Hotels

0.38

Correlation Coefficient

Orbit Technologies  Dan Hotels

Weak diversification

The 3 months correlation between Orbit and Dan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Orbit Technologies and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels and Orbit Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Orbit Technologies are associated (or correlated) with Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Orbit Technologies i.e., Orbit Technologies and Dan Hotels go up and down completely randomly.

Pair Corralation between Orbit Technologies and Dan Hotels

Assuming the 90 days trading horizon Orbit Technologies is expected to generate 0.69 times more return on investment than Dan Hotels. However, Orbit Technologies is 1.45 times less risky than Dan Hotels. It trades about 0.17 of its potential returns per unit of risk. Dan Hotels is currently generating about 0.08 per unit of risk. If you would invest  269,170  in Orbit Technologies on November 29, 2024 and sell it today you would earn a total of  39,330  from holding Orbit Technologies or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Orbit Technologies  vs.  Dan Hotels

Orbit Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbit Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Dan Hotels

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dan Hotels may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Orbit Technologies and Dan Hotels

The main advantage of trading using opposite Orbit Technologies and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbit Technologies position performs unexpectedly, Dan Hotels can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dan Hotels will offset losses from the drop in Dan Hotels' long position.

The idea behind Orbit Technologies and Dan Hotels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.